Over thirty economists, politicians, academics, and businesspeople have put their name to a letter calling on the Chancellor to enact pro-growth policies in order to recover from the lockdown. Ahead of the Chancellor’s speech today, the letter highlights a new body of research from the Institute of Economic Affairs, detailing the conditions that allowed for strong UK growth in the period from 1993-2003. The conditions are not a mystery – this country saw them in the recent past…

The letter argues that its policies, grounded in this country’s economic history, have a proven track record and hence can form a practical basis for an agenda that could be pursued now to boost our economic recovery. They include…

“In this open letter, we seek to spotlight historical evidence of successful economic and fiscal policies drawn from UK data. 

The Chancellor and his colleagues at HM Treasury face two major and very difficult-to-resolve issues: highly-stressed public finances, and a lack of labour productivity growth (leading to stagnant real wages and living standards). There are other pressing economic issues, but these stand out as secular, rather than exclusively Covid-19 related.

 Conditions for growth are not a mystery: we have seen them in the UK in the recent past. In the last 40 years, the highest period of growth of government revenue was 1993-2003. This coincided with a period of strong GDP per capita and productivity growth.

The conditions that pertained at the time make a convincing case for the policies needed to stimulate and sustain our economic recovery. They were, in summary:

  • A top rate of income tax of 40%;
  • Corporation tax ranging from 33% to 19%, falling throughout the period;
  • Highest rate of Stamp Duty on residential property of no more than 4%;
  • VAT rate of 17.5%;
  • Capital Gains Tax rate at the same as income tax rate, but Taper Relief (from 1998-99) reducing the rate on shares by up to 75% (i.e. giving a top rate of 10%);
  • A light regulatory burden on all productive sectors: less financial regulation, less labour market regulation, more targeted health and safety regulation, less energy sector regulation.

Governments have choices. This government may not choose to adopt some or any of these successful policies. At the very least, however, this evidence should weigh heavily on any decision-making.”

List of signatories:

Andrew Allison, Head of Campaigns, The Freedom Association

Steve Baker, Member of Parliament for Wycombe

Professor Christian Bjørnskov

Douglas Carswell, Former Member of Parliament

Professor Tim Congdon

Alison Cork, Founder, Alison At Home

Professor Kevin Dowd

Martin Durkin, Chief Executive, Wag TV

Professor Anthony Evans

Suzanne Evans, Director, Political Insight

Chris Gibson-Smith CBE, Former Chairman, London Stock Exchange Group

Lord Hamilton of Epsom

Dan Hannan, Former MEP

Laurence Hollingworth, Vice Chairman, JP Morgan

Jonathan Isaby, Director, Politeia

Julian Jessop, Independent Economist

Matt Kilcoyne, Deputy Director, Adam Smith Institute

Dr Ruth Lea CBE

Graeme Leach, Chief Executive, Macronomics

Andrew Lewer, Member of Parliament for Northampton South

Lord Lilley

Mark Littlewood, Director General, Institute of Economic Affairs

Tim Martin, Founder, Wetherspoons

Professor Catherine McBride

Professor Patrick Minford

Terence Mordaunt, Co-owner, Bristol Port Company

John O’Connell, Chief Executive, TPA

Alexandra Phillips, Former MEP

Neil Record, Chairman, Institute of Economic Affairs

Matt Ridley, House of Lords

Professor Stan Siebert

Greg Smith, Member of Parliament for Buckingham

Carlo Stagnaro

Professor James Tooley

Dr Radomir Tylecote

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